On October 26, 2001, the President signed into law, the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 ("Title III").1 Section 352 of Title III requires financial institutions, as defined under the Bank Secrecy Act ("BSA"), to implement an anti-money laundering program by April 24, 2002. At a minimum, this program must include internal policies, procedures and controls to deter, detect and report suspicious activity; a designated compliance officer to oversee anti-money laundering surveillance; an ongoing training program for employees; and an independent audit function to test the compliance of the program. The Commodity Futures Trading Commission, at the direction of the Department of the Treasury, asked NFA to adopt minimum standards for anti-money laundering programs applicable to the futures industry. NFA adopted NFA Compliance Rule 2-9(c) and a related Interpretive Notice to make an anti-money laundering program an NFA Requirement and to provide Members with guidance on the components of these programs. Both the amendment to Compliance Rule 2-9(c) and the Interpretive Notice were approved by the CFTC on April 23, 2002.

Although the BSA defines "financial institution" to include FCMs, CPOs and CTAs (but not IBs), the Department of the Treasury requested that the CFTC and NFA make NFA's anti-money laundering program requirements applicable to IBs because Treasury intends to clarify that IBs are within the BSA's definition of "financial institution" in the near future. In Treasury's view, IBs should be considered a "financial institution" so that Title III's requirements apply to FCMs and IBs in a manner comparable to clearing and introducing broker-dealers in the securities industry, which are both currently included in the definition of "financial institution." It is also NFA's understanding that the Department of the Treasury has decided to defer application at this time of the anti-money laundering compliance program requirements to CPOs and CTAs. As a result, at this time, the requirements of NFA Compliance Rule 2-9(c) and the related Interpretive Notice are limited to NFA Member FCMs and IBs. If and when Treasury reinstitutes these requirements for CPOs and CTAs, NFA will issue anti-money laundering program guidance for CPOs and CTAs.

NFA recognizes that its FCM and IB Members face a significant challenge in implementing these programs by the statutory mandated date and any programs that are adopted will be refined through time. As always, NFA staff offers its assistance to FCM and IB Member firms so that they have an anti-money laundering program in place that meets the requirements of NFA Compliance Rule 2-9(c) and the Interpretive Notice. If you have any questions regarding NFA's requirements, please call Carol Wooding at 312-781-1409, Ann-Marie Kaiser at 312-781-1880, Sharon Pendleton at 312-658-6540 or Carla Colone at 212-513-6028.